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Business trends

Japanese restaurants cut working hours as labor shortage deepens

Major chains scrap year-round operations to keep workers happy

Sushiro, Japan's largest conveyor-belt sushi chain, said it will continue to close for two days in February every year to give employees more time off. (Photo by Ken Kobayashi)

TOKYO -- Major Japanese restaurant chains are scrapping year-round operations, as the industry tries to keep staff amid a deepening labor shortage.

Nagoya-based restaurant operator Kisoji recently announced it will close its 119 shabu-shabu hotpot restaurants across the country on May 7 and 8, which follows a 10-day holiday period known as Golden Week. A company spokesperson said it will be the first time the chain, which had always opened throughout the year, will be closed for an entire day.

"By organizing our working environment, we aim to secure employment against the shortage of manpower which is becoming more serious," the company said.

Kisoji's decision followed in the footsteps of Sushiro Global Holdings, Japan's largest sushi chain operator, which closed about 500 outlets for two days in February. Ramen chain Kourakuen also made Jan. 1 a holiday, which the company said was the first time in its 64-year history.

The trend highlights the seriousness of labor shortage in Japan, where the working age population has fallen by around 10% over the past decade. The ratio of job openings to applicants, a key indicator of the labor market's tightness, hit a 45-year high in 2018.

Japan's restaurant industry, which has a higher portion of labor costs compared with other sectors, has been hit particularly hard. Skylark Group, one of Japan's largest restaurant operators, reported a 19% year-on-year decline in operating profit in 2018 due to rising wages. Beef bowl chain operator Yoshinoya Holdings swung to a net loss for the March-November period.

Restaurants chains have been hesitant to raise prices on fears of losing customers as inflation remains sluggish. Many are now racing to automate tasks using cooking robots and self-serving registers, as well as offering perks to employees to keep them.

"Restaurants used to require employees to provide hospitality to customers," said Ryozo Minagawa, an analyst at Nomura Securities. "They are starting to realize that it is becoming impossible to maintain that quality and offer low prices at the same time."

By increasing holidays, restaurants are expected to lose millions of dollars in revenue. The impact on profit margins of leaving equipment and ingredients idle for days "will not be small," Minagawa said. Still, restaurants are hoping that keeping workers happy will work in their favor over the long run.

"We asked what employees want and the top request was holidays," Sushiro CEO Koichi Mizutome told reporters last month. "We lose several million in revenue but we see it as an investment."

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